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Creating power of attorney
04/04/2006 The Star By BHAG SINGH
In this present age almost everyone depends on other professionals to attend
to different tasks. The entrustment of such tasks to others is due either to
necessity or convenience.
Whatever the reason for such entrustment of work to others, it involves
creating an appointment where such persons are referred to as agents or
attorneys. In other cases, the word Power of Attorney is used.
Whether a simple agency arrangement on basic principles or a Power of
Attorney it, involves one person empowering another person to take the
required action. And where such authority is given it has the effect of
creating a commitment for and on the part of the person who gave the power.
A basic difference is that where a person merely acts as agent of another
the relationship is generally guided by the provisions of the Contracts Act
1950 which deals with the subject of agency, how an agent is appointed and
whether he is authorised as well as aspects relating to ratification and
revocation of authority.
This part of the Contracts Act 1950 also deals with the duty of the agent to
the principal and vice versa as well as the obligations that are created in
the process.
A person may claim to be an agent but a dispute may arise because the facts
may show that the person who claims to be the agent acted without authority
or outside the scope of the authority.
When this happens it will become necessary to examine whether the principal
has given authority to act if not expressly then at least impliedly. Even
where there has been no express or implied authority there can be the
element of ratification.
Quite apart from all this there are also situations where by reason of
circumstances the person who has acted may be deemed to act in a manner
which binds the principal on account of apparent authority.
It will be seen that in the context of the principal-agent relationship
there can arise considerable room for disagreement unless the arrangement is
clearly reflected in a written document.
And even a written document may not necessarily prevent differences arising.
This is because the agreement may be between the principal and agent and not
be known to a third party.
However, where there is a Power of Attorney, there is a greater degree of
formality involved which makes any action taken under the Power of Attorney
more difficult to challenge.
The instrument of Power of Attorney is provided for by the Power of Attorney
Act 1948 (Act 424) which only applies to West Malaysia. Sabah and Sarawak
have similar legislations which are substantially similar. The reason for
this is historical.
Where this Act applies it allows the arrangement for a person to be
appointed in a more formal manner. This would usually result in
comparatively fewer opportunities to challenge the appointment as well as to
contest any action taken by the holder of the Power of Attorney.
It involves one party conferring power on another to do a stipulated act.
The word “donor” and “donee” are used to refer to the persons involved. In
order to have the full benefit of such a document the law requires certain
formalities to be complied with strictly.
To start with an instrument purporting to create a valid Power of Attorney
must be executed before and authenticated by either a Magistrate or a
Justice of the Peace or a Land Administrator or a Notary Public or a
Commissioner for Oaths or an Advocate and Solicitor or an Officer acting in
the course of his employment of a legally set-up company carrying on the
business of banking in West Malaysia.
If it is executed outside West Malaysia the persons who are required to
attest the document may in some cases be different.
In order to validly bring into existence an effective Power of Attorney a
copy duly compared with and marked by the Senior Assistant Registrar, with
the words “true copy” must be deposited in the Senior Assistant Registrar’s
office of the High Court. Requisite fees must also be paid.
It is the compliance with such requirements which gives greater
effectiveness to such a document. Where it is expressed that the Power of
Attorney is irrevocable in favour of a purchaser it cannot be revoked by the
donor without the concurrence of the donee or even the death, marriage,
mental disorder, unsoundness of mind or bankruptcy of the donor.
A Power of Attorney can also be expressed to be irrevocable for a fixed
period of time.
Despite such specific statutory provisions it does not necessarily always
mean that the Power of Attorney once given, registered in accordance with
the requirement is absolutely not open to challenge.
There can be situations where there may be grounds to challenge the validity
of the Power of Attorney itself. This, of course, could be the subject the
of a separate discussion. |
